Principles of Macroeconomics // Fall 2024
marcio.santetti@emerson.edu
Required readings:
Main agreed upon causes of inflation:
Demand-pull;
Cost-push;
Class conflict (aka wage-price spiral).
[1] Demand-pull inflation:
“Too much money chasing too few goods.”
Irresponsible government?
Full-employment?
[1] Demand-pull inflation:
Recall aggregate demand:
\[ C+I+G+(X - M) \]
[1] Demand-pull inflation:
[1] Demand-pull inflation:
[1] Demand-pull inflation:
In 1958, A. W. Phillips (1914—1975) empirically found that low rates of unemployment were associated with high rates of inflation, and high unemployment with low inflation.
This relationship has since been referred to as the Phillips curve.
Q: How can lower unemployment lead to a general increase in the price level (i.e., inflation)?
[2] Cost-push inflation:
Increases in the cost of producing goods and services:
[2] Cost-push inflation:
🔗 The lagged effects of COVID-19 supply chain disruptions on inflation (Brookings Institute)
[2] Cost-push inflation:
[2] Cost-push inflation:
[2] Cost-push inflation:
[3] Conflict inflation:
Conflicting claims over income distribution;
Who’s to blame?
[3] Conflict inflation:
[3] Conflict inflation:
[3] Conflict inflation: